Welfare Financing Policy: discussion

Social Development

11 November 1999
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

12 November 1999

Documents handed out :
Financial and Fiscal Commission: Presentation to the Welfare Portfolio Committee (Appendix 1)
Explanatory Memorandum: African Charter on the Rights and Welfare of the Child (Appendix 2)
Welfare Financing Policy (email info@pmg.org.za for document)

Chairperson: Mr E Saloogee

The Committee will meet on Wednesday 17 November to discuss the African Charter on the Rights and Welfare of the Child which needs to be ratified.

The Financial and Fiscal Commission briefed the committee on the costing of the Welfare Financing Policy (FP). It emerged that 90% of the welfare budget is currently spent on very necessary social security grants including pensions and disability grants. It was pointed out that therefore less than 10% of the budget would be left for "developmental welfare services" mentioned in the Financing Policy. In terms of the delivery of services one could cater only for as much as could be afforded.

In the assessment of the FFC, it was clear that the present budget was hopelessly inadequate to cater for the Financing Policy funding. He was also concerned that the Financing Policy was not very clear on how it was going to get down to the fundamental issues of, for example, helping the poor.

African Charter on the Rights of Children
The Chair referred to the letter from the Minister regarding the ratification of the African Charter on the Rights of Children. For the charter to become effective, in securing the implementation of these rights, 15 member countries of the OAU had to ratify the Charter. The chairperson said that South Africa was the fifteenth member and has yet to ratify the charter. The ratification, it was hoped, would take place on 18 November in the National Assembly. Prior to this, the committee would have to scrutinise the Charter as well as the explanatory memorandum. The chairperson suggested that the meeting on Wednesday 17 November be postponed in order for the committee to consider this. The members were generally not happy with the short notice and the postponement of the Wednesday meeting - a briefing by the Department on the HIV issue. They nevertheless accepted that the ratification of the Charter was important.

Welfare Financing Policy
Mr Selwyn Jehoma from the Financial and Fiscal Commission (FFC) was asked to present on the financial implications of the new Financing Policy of the department. Mr Jehoma pointed out that the FFC, a statutory body set up in terms of the Constitution, makes recommendations to parliament based on detailed research around the needs of the various provinces in relation to its budget allocations. He stressed that the FFC did not serve, for example, the Departments of Finance or Welfare but served Parliament and was accountable to it.

His presentation (see Appendix 1) did not display what the exact cost implications of the new Financing Policy were, but instead pointed out what should be considered when a department like the Welfare Department in fact starts developing a policy such as the new Financing Policy. He showed what the different costing options would be but stressed that in essence the new Financing Policy was not actually "new" in that there was no new money involved. It just looked at a new approach to the spending of the budget, which was presently inadequate in terms of the implementation of the Financing Policy. The funding of new welfare organisations, the supply of telephones and faxes were some of the things the new Financing Policy spoke about. He said that the Financing Policy was very vague on how these things would be paid for. He was sure that the Financing Policy had noble and ambitious objectives but felt that more emphasis had to be given to the fundamental problems of dealing with poverty and feeding people without any means to feed themselves. He was convinced that the new Financing Policy needed a rethink taking into account the cost implications and strategies.

Questions And Comments
Ms E Ghandi (ANC) said that because 90% of the welfare budget went to social security, an 80/20 split would in fact decrease the number of dependants on social security. Most dependants were the aged and disabled. She said that in a country with 40% unemployed, where there were many able bodied people unable to get employment, she said that it was impossible to expect the aged and disabled to in fact have any realistic chance. She thus wanted to know with the proposed 80/ 20 split, how these vulnerable people would benefit.

Mr Jehoma said that the Financing Policy clearly wanted to get fewer people to depend on welfare. He said that what was being ignored was that there were other programs of a welfare nature, not funded by welfare. He pointed out that the departments of health, public works and water affairs all perform welfare functions to an extent. If these departments' budgets were considered as well he said that it may turn out that there was in fact a 70/30 ratio.

She referred to the proposed partnership between private welfare organisations and government. Whilst she saw this as a cost effective arrangement in terms of the provision of welfare services, she said that the Financing Policy did in fact not say how Government would benefit from the funding of the Welfare organisations. He said in addition that social security was an important and vital source of income to millions of people. He said that the social welfare net has been broadened fairly well. He said that there were constitutional commitments in relation to people, qualifying in terms of a means test, being entitled to receive welfare grants. He said that if, as a result of this test, the need for social security be extended, to further than the current 90/10 ratio, this should be done.

Mr Jehoma was asked how much the department of welfare would save through the phasing out of the maintenance grant. She asked whether what was being saved would be beneficial in addressing the dependancy of mothers who got something from the grant in order to bring intra provincial equity.

Mr Jehoma said that there was a study presently underway to see what the impact of the phasing out of the grant would be. He said that at this stage there was no information out. To some extent welfare has put in place what they call flagship programmes to help mothers, whose grants are decreasing, to survive.

Ms D Morobi (ANC) said that it was clear that Mr Jehoma had reservations about the Financing Policy. She was concerned about legislating something which was not implementable. She wanted a recommendation from the FFC on what should be done seeing that, in their view, the Financing Policy was not implementable. She wanted to know whether after the FFC's research, the Financing Policy should still proceed.

Mr Jehoma said that when formulating policy, one should have clear implementation guidelines, which were simply absent. He suggested that welfare's policy was a "noble" effort but said that it was necessary to go back to the drawing board.

The Chairperson said that what Mr Jehoma had told the committee had merely confirmed their fears about the Financing Policy. There was just not enough money to pursue the options in the Financing Policy. He nevertheless wanted to be able to have concrete figures on the exact costing for the Financing Policy in order to be able to convince the Department to go back to the drawing board.

Mr Jehoma said that because of the vagueness of the term "developmental welfare services" it was difficult to project accurately the costs of the Financing Policy. In order for the FFC to go into more detail with the cost implications of the Financing Policy, a formal request for this should be made to Mr Murphy Morobe, Chairperson of the FFC.

The meeting was adjourned.

Appendix 1
Selwyn Jehoma: Welfare Researcher

Costing the Welfare Financing Policy

1. Role of the Financial and Fiscal Commission
Recommend and Advise Government, Chapter 13 of Constitution Sections 214 ss 2 a-j Intergovernmental Fiscal Relations Act Financial and Fiscal Commissions Act

2. Rationale
judge the genuine costs of service outputs or services produced for or on behalf of the populace or taxpayers

· evaluate the revenues and costs related to social security and social welfare services.

· identify opportunities for cost reduction and overall improved financial performance

· to make accurate comparisons of activity costs compared to other government units and private vendors performing the same functions.

· extend analysis of programmes and services beyond our activities

· track performance measures

· increase availability of reliable/crucial financial performance indicators.

· improves budget as an indicator of performance measures for provinces as well as for allocations to welfare organisations.

· allows greater degree of accountability to taxpayers techniques

Problem: example Social Welfare reports how many private welfare organisations served, but no estimate is provided of the fully allocated cost per service process

3. Costing Social Welfare Services
In our costing of social security and other grants we used the objectives or policies expressed in the means test.

In welfare services there may be "clear" policies, but because of its nature and particularly because of the lack of data, costing is a lot more complicated. It is difficult to determine the true costs of providing
"developmental welfare services" for the people of South Africa. E.g. In the case of health care

4. Government's aims in welfare are to:
Attack poverty in the main,
· Increase developmental social welfare services,
· Decrease dependency
· Integrated Social welfare system,
· Comprehensive social security
· minimum norms and standards in service provision.

Analysis of Spending Trends
[Graph not included[

5. Provincial Spending
[Graph not included]

6. Social Security
[Graph not included]

7. Social Welfare Services
Departments are being asked to increase spending on population units, community development etc. Given the scenario above this amount can hardly be increased without sacrificing other commitments. An increase would mean more underfunding in other areas. Could it be from Social Security? Or any other programme.

8. The FFC's and We/fare Funding: Cost- needs Based
Guided by principles.
Autonomy, Equitable, Minimum basic social services, Predictability, Developmental, transparent, objectively based
Why cost based? Refer to rationale above

9. OperationaIisation
Identify the cost functions in welfare service or programme. In social security you In social security you identify social grants, it's the programme.
Objective? Relief to certain categories of people, the indigent.
How do you ascertain who they are? Means test.
Legislative framework: Constitution Welfare Laws Amendment Act

In Welfare Services: Three Options
1. Policy aims or objectives. 80:20 principle = 4:1
social security: = social welfare services
Cost of Social Security = cost of social welfare

2. Equalisation of outputs. Set a normative sum, take existing budgets and equalise it through provinces. Same cost per capita

3. Equity in service provision. Giving according to need

10. Equity in Service provision
[Graph not included]

Financing Policy
Raises many questions with fuzzy objectives that are not spelled out.
Department must look at the options. They are not mutually exclusive

Important for the FFC at this point is outcomes not inputs we are concerned with the level and quality of the service.

Appendix 2

It will be appreciated if you could consider the explanatory memorandum before the adjournment of the current session of Parliament. For the Charter to come into effect it must be ratified by at least 15 member States. South Africa will be the fifteenth Member State. Cabinet has instructed that the Charter be ratified as a matter of urgency.


Letters and Explanatory- Memorandum on Ratification of the African Charter on the Rights and Welfare of the Child

The submission seeks approval for the distribution of the Explanatory Memorandum on Ratification of the African Charter on the Rights and Welfare of the Child for tabling in Parliament.

Cabinet has approved the submission of the Charter to Parliament for ratification and letters are attached to the Leader of Government Business, and the Chairs of the Portfolio and Select Committees.

Recommendation: That the submission is approved and the letters signed

On 29 September 1999 Cabinet approved that the submission of the Organisation of African Unity: African Charter on the Rights and WelFare of the Child (the Charter), be submitted to Parliament for ratification.

To date 27 countries of the 53 Organisation of African Unity (OAU) Member States, have signed the Charter while 14 have ratified it. For the Charter to come into effect, it must be ratified by at least I5 Member States. Cabinet has instructed the core departments to prepare documentation for the ratification of the Charter. The core departments are Welfare, Health, Justice, Education and Foreign Affairs.

In terms of the Charter, Member States shall recognise the rights, freedoms and duties contained therein and take the necessary steps to give effect to the provisions

The Charter comprises amongst others, the following: the definition of a child, articles regarding nondiscrimination, survival and development, freedom of expression and association religion, protection of privacy, education, leisure, disability, health, sexual exploitation, drug abuse, together with the sale, trafficking and abduction of children.

In terms of the Constitution of the Republic of South Africa every child shall have the right to security, basic nutrition, basic health and social services and to be protected against abuse and exploitation.

The Government has ratified the United Nations Convention on the Rights of the Child (the Convention). The main goals of the Convention make provision for the survival development and protection of children. The Convention has been operationalised in the National Plan of Action for Children (the NPA), in South Africa. The NPA Steering Committee (the Committee) has been constituted to oversee the implementation of the plan. The Committee comprises representation from both government and NGO sector and is chaired by the Office of the President. The following departments are represented Health, Welfare, Education, Justice, Foreign Affairs, Correctional Services, Water Affairs and Forestry and Labour.

The National Children's Rights Committee, Human Rights Committee and UNICEF are also members. Provincial plans of action have been established for ensuring the implementation of the NPA.

The OAU Heads of State adopted the African Charter due to factors which affects children, such as socio-economic, cultural, traditional and developmental circumstances, natural disasters, armed conflicts, exploitation and hunger.

The following is a summary of key articles contained in the Charter.

The rights and freedom of children are recognised. Provision is made for survival, protection and development of the child. Freedom of thought, conscience and religion is recognised. The child has the right to education, health services and recreation. The disabled child has the right of protection.

The child should be protected from economic exploitation, child abuse and from substance abuse. The family is considered as the natural unit and basis of society. State Parties must take measures to ensure that no child shall take part in hostilities. Every child shall have responsibilities towards his or her family and society.

The Chief State Law Adviser has scrutinised the Charter and is of the opinion that the provisions thereof appear not be in conflict with the domestic law of South Africa. The Office of the Chief State Law Adviser, International Law, is of the opinion that there are no international legal constraints for South Africa to ratify the Charter.

All the core departments agree that South Africa comply with most of the articles or are in the position to fulfil its obligations over time.

The NPA Steering Committee, which is responsible for managing the Convention greed to be assigned the charge of monitoring the implementation of the Charter.

As ratification is required, the Charter will be binding on the Republic in terms of the Constitution only after it has been approved in both the National Assembly and the National Council of Provinces.

It is recommended that:
5.1South Africa ratify the African Charter on the Rights and Welfare of the Child. And
5.2An Instrument of Accession signed by the Minister of Foreign Affairs, be delivered to the Organisation of African Unity.


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